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8 June, 11:42

July 15 Declared a cash dividend payable to common stockholders of $165,000. Aug. 15 Date of record is August 15 for the cash dividend declared on July 15. Aug. 31 Paid the dividend declared on July 15. Prepare journal entries to record the above transactions for Emerson Corporation.

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  1. 8 June, 13:28
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    July 15

    Debit: Retained Earnings $165,000

    Credit: Cash Dividend Payable $165,000

    Aug 15

    No entry Required.

    Aug 31

    Debit: Cash Dividend Payable $165,000

    Credit: Cash $165,000

    Explanation:

    The date of declaration is the date on which Board of Directors decides to pay the dividends to Stock Holders and the Liability is created.

    On the other hand, Date of Record is merely decision made by Stock Holders on the amount announced on the date of declaration, that how this amount will be distributed among them, So there is no journal entry required on this date.

    The date of payment is the date when the dividend liability is paid off to the stock holders, hence the contra entry is made in Dividends Payable Account to cancel out the transaction.

    July 15

    Debit: Retained Earnings $165,000

    Credit: Cash Dividend Payable $165,000

    To record Cash Dividend of $165,000 Declared.

    Aug 15

    The date of record is merely announcement of which stock holders receives dividends, so no entry required on this date.

    Aug 31

    Debit: Cash Dividend Payable $165,000

    Credit: Cash $165,000

    To record payment of $165,000 Cash Dividend declared on July 15.
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